- The Washington Times - Monday, June 14, 2004

Today, the rules that dictate how telephone companies compete for customers will expire. Contrary to the claims of some, consumers will be hard-pressed to notice any disruptions of service or cost increases for some time. In fact, the Justice Department’s decision to allow those rules to expire eventually is likely to result in increased competition and more consumer choice.

The rules, established by the Federal Communications Commission (FCC), forced the four major local phone service carriers (the Baby Bells) to lease access to their networks to their competitors at steeply discounted, government-set rates. Maintaining that those rules reduced competition, FCC Chairman Michael Powell had long fought to reduce those network-sharing requirements, but he had been thwarted in changing them by two Democratic commissioners and their ally, Republican commissioner Kevin Martin.

The courts had repeatedly sided with Mr. Powell, most recently in March, when the U.S. Court of Appeals for the District found that the FCC had failed to make the case that its rules were needed to reduce the allegedly unfair advantage enjoyed by local phone carriers. Last week, the Solicitor General announced that it would not appeal the decision. Shortly afterward, Mr. Martin announced that he would not support an appeal either. Yesterday, the Supreme Court refused to grant a stay sought in several appeals. This fall, the court will announce if it will hear the appeal, but that is unlikely.

Consumer advocates and policy-makers had feared that freeing the Baby Bells from the strictures of government controlled prices would cause an increase in local rates. Others, including members of the While House policy shop, had long argued that doing so would act as a catalyst for greater competition and the benefit of consumers.

There is little likelihood that consumers will see increases any time soon, since some of the Baby Bells have promised to freeze rates through the end of the year, and any rate increases must be sanctioned by state legislators. In the interim, Mr. Powell is continuing to pressure local phone companies to devise mutually acceptable wholesale price and access rules, in addition to writing new rules, which he hopes will be in final form before the end of the year.

Greater broadband access should also follow, since local phone companies will no longer be subsidizing their competitors when investing in new infrastructure.

The administration has done well regarding the local phone market. The telecom sector will benefit, and so will consumers.

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